KUALA LUMPUR: German companies will continue to grow their presence in Malaysia by increasing their local investments within the next year to develop their businesses.
According to the latest AHK World Business Outlook Fall 2022 survey results, German companies will make the positive move in the face of multiple headwinds that will challenge businesses worldwide, including global supply bottlenecks, the new XBB Covid-19 variant and the Russia-Ukraine war.
It said a 54.2 per cent increase in the headcount is also expected in their companies in the next 12 months, which bodes well for job seekers in the face of a possible economic downturn.
"German companies named three advantages of doing business in Malaysia, namely low labour costs (65.2 per cent), supplier network (60.9 per cent) and the availability of skilled workers (56.5 per cent).
"The global supply chain disruption will continue to be a hurdle for companies, and to cushion the impact, 65.2 per cent have rolled out plans to look for new or additional suppliers.
"81 per cent said Asia Pacific (excluding China) is their go-to region to source for new suppliers while 61.9 per cent preferred to look within Malaysia specifically," state the survey.
The survey also revealed that German companies preferred to source domestically and from within the region for cost reasons (76.2 per cent) and because it allowed them to diversify or minimise risk in the event of failures (61.9 per cent).
It said this trend in multisourcing could most likely be attributed to the supply and demand shocks brought on by the pandemic and the Russian invasion of Ukraine as a way of developing a resilient supply chain strategy.
Additionally, 50 per cent of German companies already operating in Malaysia preferred to remain in the country when asked which regions they had looked at to move their operations to.
87.5 per cent of those companies said they would rather stay in Malaysia because of market development, while 50 per cent cited cost as the main reason.
Malaysian-German Chamber of Commerce and Industry (MGCC) executive director Daniel Bernbeck said the AHK World Business Outlook survey results demonstrated that Malaysia has plenty to offer German companies, including an investor-friendly environment, a skilled workforce and a broad and strong supplier network.
"It is promising to see an indication of job creation and preparedness to increase expenditure to grow their presence in the country – these signal strong recovery and resilience after two years of disruptions due to the Covid-19 pandemic.
"As representatives of German industry and trade in Malaysia, we are happy to hear that these companies are planning long-term in Malaysia, and this confidence from foreign investors will facilitate economic growth that will further propel Malaysia's position as an ideal place of doing business in the region," he added.